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RE: STEEM DOLLARS "GONE ROGUE":SBD PUMP AND ITS IMPLICATION FOR STEEMIT PLATFORM ?
" A stable cryptocurrency pegged to the U.S. dollar"
Pegging STEEM to the US Dollar is unwise for several reasons:
The USD is a depreciating currency.
The USD "value" is controlled by people/corporations/governments which do not want a competing currency.
By definition, pegging SBD to a devaluing currency devalues SBD.
In places where the US dollar is taxed (and SBDs go untaxed) the SBD should have a "value" greater than the USD.
If the SBD would have been designed to maintain purchasing parity to the USD from 1913, then 1 SBD would buy about 25 gallons of milk, 7.5 gallons of gasoline or 1/20 of an ounce of gold.
I would rather have people holding things that hold value rather than holding price.
I think that if the USD was going to lose against crypto the algorithm would be changed to make it independent and only work in correlation with Steem...but this is actually a great point!
Exactly!
the USD loses at an average of 2% per year
But that's how it's designed to be! SBD never was supposed to be the "main currency", Steem was supposed to be that. SBD was designed to be a token with a fairly static value so that people could be sure of the amount of money they had without worrying about fluctuations.
I mean, that's one of the main drawbacks of crypto right now! You may pay for your coffee with BTC when it's at $16k, but by the time the transaction completes, btc might be at $18k. So now you have to handle all that complexity. SBD was supposed to be a solution to that problem.
SBD doesnt have the transaction bottleneck problem that BTC has, so purchasing latency is quite comparable to the USD
Hypothetically, if SBD reaches $1000, I can still sell a pound of tomatoes for 0.001 SBD. The SBD will still serve the utility needed by both the buyer and the seller.
The only problem is reducing price volitility (stabilizing prices)
As with all currencies(crypto, central bank fiat, seashells, etc.), there will always be some level of volitility. The volitility will decrease with time and use. Eventually, SBD and STEEM can reach some level of parity but that comes with a reduction in volitility.
Hard pegging the SBD to the USD will mean the people holding SBDs will have the same ammount of control of SBD value as they have with USD value, which is none.
Telling people: "This new STEEM crypto currency is pegged to the USD, so you'll only lose about 2% of your purchasing power per year!" makes it hard to convince people to use it.
The most beautiful part is that the design can be tweaked to fit the needs of the users.